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Shad's Inc. v. Key

United States District Court, W.D. Oklahoma

July 10, 2019

SHAD'S INC., d/b/a SHAD'S BAR, and L.L. DRAKE, a/k/a MELISSA L. DRAKE and d/b/a SHAD'S BAR, Plaintiffs,
v.
CRAIG KEY, Defendant, and CONTINENTAL CASUALTY COMPANY, a/k/a CNA LAWYER'S PROFESSIONAL LIABILITY INSURANCE COMPANY, Garnishee.

          ORDER

          SCOTT L. PALK, UNITED STATES DISTRICT JUDGE

         Before the Court is Garnishee Continental Casualty Company's Motion for Judgment on the Pleadings [Doc. No. 31], filed pursuant to Federal Rule of Civil Procedure 12(c). It is at issue. See Resp., Doc. No. 39; Reply, Doc. No. 42.

         This case is a tale of five lawsuits. First is the action filed by J&J Sports Productions against Plaintiff Shad's Inc d/b/a Shad's Bar in this Court and presided over by Judge Cauthron. Second is the action filed by Shad's Bar against its counsel in that lawsuit- Defendant Craig Key-in the District Court for Oklahoma County. Third is the current lawsuit, a garnishment action. Technically, it is a continuation of the second suit. But because the adverse parties are now Shad's Bar and Continental Casualty (not Shad's Bar and Mr. Key), and it is now in this Court instead of in state court-it is essentially a different case with different issues.[1]

         Fourth is a lawsuit filed by various persons against Brian and Dana Jones in the District Court for Payne County. Finally, there is an action filed by the Joneses against their counsel in the fourth action-again, Mr. Key-which also took place in the District Court for Payne County. Neither Shad's Bar nor J&J Sports had any involvement with the Joneses' lawsuits. The Court will address each of the relevant actions in turn.

         I. Background[2]

         Shad's Bar was sued in 2011 by J&J Sports in a case presided over by Judge Cauthron of this Court. The Court refers to this first matter as the “Underlying Shad's Suit.” Shad's Bar hired Mr. Key to represent it in that case, paying him $4, 000. But Mr. Key did not enter his appearance, did not answer or move against J&J Sports's complaint, and did not respond to J&J Sports's October 2012 motion for default judgment. A default judgment was issued against Shad's Bar, and a subsequent motion to vacate the default judgment filed by new counsel appearing on behalf of Shad's Bar was denied.

         Mr. Key was insured for professional liability by an insurance policy issued by Continental Casualty for the policy term of February 1, 2013, through February 1, 2014.[3] The insurance policy is a claims made policy-i.e., “it applies only to those claims that [were] both first made against [Mr. Key] and reported in writing to [Continental Casualty] during the policy period.” Policy at CCC 000014, Doc. No. 17-1 (capitalization omitted). The insuring clause of the policy provides coverage as follows:

[Continental Casualty] agrees to pay on behalf of [Mr. Key] all sums in excess of the deductible that [Mr. Key] shall become legally obligated to pay as damages and claim expenses because of a claim that is both first made against [Mr. Key] and reported in writing to [Continental Casualty] during the policy period by reason of an act or omission in the performance of legal services by [Mr. Key] or by any person for whom [Mr. Key] is legally liable, provided that:
1. [Mr. Key did not give] notice to a prior insurer of such claim or a related claim;
2. [Mr. Key did not give] notice to a prior insurer of any such act or omission or related act or omission;
3. prior to the date [Mr. Key] first becomes an Insured under this Policy or became an Insured under the first policy issued by [Continental Casualty] (or its subsidiary or affiliated insurers) to [him], whichever is earlier, . . . [Mr. Key has not] had a basis to believe that any such act or omission, or related act or omission, might reasonably be expected to be the basis of such claim;
4. there is no other policy, whether primary, contributory, excess, contingent or otherwise, which provides insurance to [Mr. Key] for the claim based on or arising out of an act or omission in the performance of legal services by [him] or by any person for whom [he] is legally liable . . . . [and]
5. the act or omission occurred on or after 02/01/2007.

Id. (emphasis omitted) (as amended by the Retroactive Exclusion Clause Endorsement located at CCC 000005). The insurance ...


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